Chrysler Dealers Who Regained Their Franchises Back To Square One

by Derek Kreindler

March 29th, 2012 5:43 PM

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chrysler dealers who regained their franchises back to square one

C hrysler dealers who were terminated and then re-instated have been left out in the cold, after a federal judge ruled that the Federal Appropriations Act, a 2010 law that opened the door for dealers to regain their franchises via arbitration, did not overrule state dealer laws that deal with dealer markets.

Amidst all the legalese, the message is clear; the 20 dealers who lost their franchises are not going to be unconditionally reinstated as full dealers. Instead they have an “opportunity” to become dealers again in the markets that they previously served. The dealers would have to start from scratch, going through negotiations with Chrysler in the hopes of receiving a “letter of intent” and a dealer agreement, as if they were a new franchise looking to set up shop and get Chrysler’s blessing.A major stumbling block exists, in that the lapse in time from their termination until now, Chrysler may already have appointed new dealers in the market areas that they previously served. Laws exist on a state by state basis to govern dealer competition, and some dealers may be shut out of their old turf if Chrysler has appointed new dealers to a “point” where laws are biased in favor of the new dealer, favoring a less competitive environment.The arbitration ruling also notes that the dealers in question don’t have any right to seek financial compensation from Chrysler. If Chrysler appointed another dealer to serve their market area, then the old dealers have little recourse to seek any kind of financial compensation from Chrysler.

#Arbitration #Chrysler #Dealers #Dodge #Industry #Ram #Sales

Derek Kreindler

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4 of 14 comments

Yesthatsteve on Mar 29, 2012

One thing that never made sense to me about the dealer closings happened in a nearby suburb. One family owned a standalone dealership for each of Chrysler's 3 brands within a mile of each other on the same road, and had owned them for decades. Well-established in the community, etc., etc. Chrysler yanked all three franchises rather than allow them to consolidate into a single, stronger unit. As a result, the properties stood vacant for quite a while, until the Chrysler store got bulldozed and replaced by an Aldi, and the Dodge store got bulldozed and replaced by an IHOP (the restaurant, not the church). The Jeep store was still vacant last time I noticed. And the family now has a much smaller, down-market used car lot further down the road that has at most 30 or so cars at a time on it. Why Chrysler (or the "Car Czar," or whoever) didn't let them consolidate all three franchises under one roof is really beyond me.

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Ronnie Schreiber on Mar 29, 2012

Getting back to the original post, it seems to me that these folks will have a leg up on getting a dealership over those starting from scratch. The already have a building with a showroom and service bays, experience in the business, brand identification in the local market etc. On the other hand, assuming the culling process was fair, perhaps they weren't the best performing dealers when they had a franchise.

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Zackman on Mar 30, 2012

Other than the previous owners and maybe former employees, nobody will ever miss those dealers in question. Perhaps they deserved to be put out. A Chrysler dealership near where I used to work apparently deserved to go out of business, even after moving from a backwater part of town to a former Lincoln-Mercury dealer location right along I-75 and off a very busy exit in Middletown, OH. Not knowing any details, I suppose it's been a hardship, but who hasn't faced challenges in the last six years, some 'way more than others, to be sure. I know I have...

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Slab on Mar 30, 2012

The Chrysler dealer that was closed in Las Vegas had just opened, and was owned by a family with many successful dealerships of various brands, and was in a newer part of town that is not well-served by other Chrysler dealers. The family still runs a successful Chevrolet dealership next door. I don't know why it was closed. I assume that it was more of a "last in - first out" thing rather than a reflection of its true potential.

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